We spend most of our
waking day at work. For employers it
should be a place where staff work well
and produce results. A committed
motivated team is an important asset and
individuals who, for whatever reason,
are seen as undermining that asset are
invariably seen by the employer as a
threat that can be done without. Yet
contrary to the perceptions of some
employers the expectations of employees
for the workplace are usually no
different. Most staff want to feel
committed and motivated in their work,
and place a personal value on the
results which they produce.
Breakdown.
However from time to time things
breakdown. Often it is not the obvious
fault of either the employer or the
employee, it is just a natural
consequence of people spending so much
of their time in the same company as
each other. When a serious dispute does
arise at work it inevitably results in
the employer and employee parting
company acrimoniously and potentially
the dispute ends in the Employment
Tribunal. Either the employer will
dismiss the employee, or the employee
will claim that the treatment they have
received has fundamentally broken down
the employment relationship. As a
consequence the employee may resign and
claim that they have been
“constructively dismissed”. Given that
the compensation limit for unfair
dismissal is now well in excess of
£50,000, it is the employer who usually
has the risk and stands to lose the most
by allowing the matter to escalate this
far.
If a matter does proceed to a Tribunal
the employer will not only have to show
that they have dismissed for a permitted
reason – usually one of misconduct,
performance, or redundancy – but also
that they followed a fair procedure in
line with the minimum statutory
requirements. If the dismissal is for
misconduct, then the employer will need
to have followed a disciplinary
procedure involving various levels of
warning save in cases of gross
misconduct.
If the dismissal is for poor performance
then the employer will be expected to
demonstrate that they have indicated
what the problem is and that they have
tried to resolve the problem by allowing
the employee sufficient opportunity to
improve. If the dismissal is for
redundancy then the employer will need
to identify the fair basis upon which
the employee has been selected for
redundancy and that appropriate
consultation had taken place.
All these procedures take time – in some
cases months – and expense. However it
is invariably the case that employers
want the matter resolved immediately.
Yet very often employees feel the same
way but understandably are not prepared
just to leave. Following the required
procedures in these circumstances is
usually not only unhelpful but can often
exacerbate the situation.
Compromise.
There is a solution. Employers and
employees who would prefer to resolve a
matter without proceeding to a Tribunal
but recognise that the employment
relationship has come or is coming to an
end can enter into a Compromise
Agreement. This usually saves time and
costs for both parties.
The employer is not required to follow
the relevant procedures and, even where
those procedures have been followed, is
not still faced with the prospect of a
Tribunal claim. The employee receives an
agreed sum of money under the agreement,
which can often be paid tax free, in
return for agreeing not to bring a
claim. The employee may also be able to
agree the wording for a reference, and
does not face the prospect of waiting
months for a Tribunal hearing or paying
solicitors at a time when they may be
out of work and can ill afford to.
Legalities.
Of course it’s not that simple.
Presenting an employee with a Compromise
Agreement may in itself constitute a
Constructive Dismissal so derisory
settlement offers contained in
Compromise Agreements may well do an
employer more harm than good if the
employee rejects the offer and proceeds
to an Employment Tribunal. The parties
must agree on the terms of settlement
which may involve some negotiation on
both sides. To be valid there are
certain specific legalities relating to
the format of the agreement.
Accordingly most employers will have the
agreement drawn up by an employment
lawyer. The agreement must be in
writing, and must specify the particular
complaint which the employee is agreeing
to compromise. The employee must have
received independent advice from a
person qualified and insured to give
that advice (invariably their own
appointed solicitor) as to the terms and
effect of the proposed agreement. The
agreement must identify who the adviser
is and it is usual for the employer to
pay some or all of the costs involved in
taking this advice. Finally the
agreement must state that the conditions
regulating compromise agreements are
satisfied.
Conclusion.
Legalities aside, Compromise Agreements
are an effective way of resolving a
variety of employment disputes and
provide an effective and viable method
of avoiding legal proceedings and the
consequential time costs and monetary
expense for both parties and we are
happy to arrange one for you through our
network.
The Interactive
Law Group